Here's Why Alder Biopharmaceuticals Dropped as Much as 18% Today

What happened

Shares of clinical-stage biopharma Alder Biopharmaceuticals (NASDAQ: ALDR) fell 18% today after the company announced the sudden departure of co-founder, President, CEO, and Director Dr. Randall C. Schatzman. The board of directors and Dr. Schatzman mutually agreed to move in different directions. Director Paul B. Cleveland was appointed interim president and CEO.

Mr. Market seems a little spooked by the news, especially given Alder Biopharmaceuticals is gearing up to submit a Biologics License Application (BLA) for its lead drug candidate, eptinezumab, as a treatment for migraines. As of 1:06 p.m. EDT, the stock had settled to a 14% loss.

A chart showing losses drawn on a chalkboard.

Image source: Getty Images.

So what

Changes in the C-suite inject uncertainty into the company's operations just as the young biopharma readies to face applying for marketing approval. In other words, it's not the best timing.

But the recent patent dispute with Teva Pharmaceuticals took its toll on shareholders over the years. Even though it ended with Alder Biopharmaceuticals earning the green light to develop eptinezumab, the stock price has dropped 60% in the last three years, half of which is due to share dilution.

That said, it's important not to read too much into the news. While Dr. Schatzman had been with the company since co-founding it in 2004, sometimes a different mindset is required for developing drugs versus marketing them. Start-ups don't remain start-ups forever.

Now what

After multiple financing transactions in early 2018, Alder Biopharmaceuticals believes it has enough cash to fund operations through 2020. In addition to eptinezumab, the company has certain rights to an externally licensed late-stage drug candidate and one wholly owned drug candidate in preclinical trials. So although this has become a narrowly focused biopharma, and despite today's news, shareholders stand to gain from the potential approval of eptinezumab.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.